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MTN to cut costs and hike prices at Nigeria unit after naira hit

MTN to cut costs and hike prices at Nigeria unit after naira hit

MTN Group’s Nigerian division is strategizing to restore profitability and reinforce its financial position by implementing measures to manage costs and tariffs. This response comes in the wake of Africa’s largest telecommunications operator reporting a significant decline in annual profit.

The sharp devaluation of the Nigerian naira was a primary factor contributing to the group’s profit decline, with MTN Nigeria, its largest subsidiary, recording a loss after tax of 137 billion naira ($101.48 million) and negative equity.

MTN Group’s headline earnings per share (HEPS), a key profitability indicator, plummeted by 72.3% to 315 cents for the year ending December 31, down from a restated 1,137 cents the previous year. Adjusted HEPS also declined by 9.5% to 1,203 cents.

The Nigerian central bank’s adoption of new forex regulations in June resulted in a significant devaluation of the naira, prompting MTN to anticipate continued macroeconomic challenges, including currency volatility.

To address these challenges, MTN is collaborating with regulators in various markets, including Nigeria, to seek approval for tariff adjustments for both voice and data services. CEO Ralph Mupita highlighted the necessity of tariff increases in Nigeria to offset network operating costs.

A significant portion of MTN Nigeria’s expenses are related to contracts with tower companies such as IHS Holding and ATC. The operator is actively renegotiating these contracts to mitigate cost escalation stemming from the naira’s devaluation.

Managing dollar exposure on its balance sheet is another area of focus for MTN, particularly in Nigeria.

At the group level, service revenue increased by 6.9% to R210.1 billion, indicating positive growth despite the challenges faced by its Nigerian unit. MTN aims to achieve expense efficiencies totaling R7 billion to R8 billion over three years, with a substantial portion of this effort focusing on Nigeria.

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